SEPA Direct Debit (SDD) is the official/unique EUR direct debit instrument available in all 34 countries of the SEPA (Single Euro Payments Area), to consumers (SDD Core) as well as businesses (SDD B2B).
The main advantages of SEPA Direct Debit are listed below:
• Management of recurring payments (subscriptions, loan repayments, etc.)
• Pull-based payment, initiated by the creditor (as opposed to a bank transfer which is initiated by the debtor), improving control over collection dates & amounts, and therefore easing cash flow forecasts
• Simplifying the customer journey (electronic signature of the direct debit mandate, then no more action necessary from the debtor)
• Improved retention rate (vs. card rebill/card expiration & credit limits issues)
Implementing SEPA Direct Debit (Core or B2B) is easy and quick, thanks to our API, which allows to electronically sign the direct debit mandate, generate the direct debit instruction as well as manage unpaid/returned items (more info here)
Core & B2B Sepa Direct Debits main characteristics are detailed below:
|ITEM||SDD CORE||SDD B2B|
|Target debtor||Consumers (incl. self-employed) or Businesses||Businesses only|
|Cut-off time for a crediting on E+1 (E=requested execution date/bank business day||E-2 before 10:30 AM (Paris time)|
|Direct Debit flow kinematic||
• Direct debit instruction issued by the creditor (you): creation of a SDD Money-In transaction in the pending status
• Debiting (on E) of the debtor
• Crediting (on E+1) of the direct debit payment onto the payment account: status of the original transaction automatically changed from pending to success
*In case of returned/unpaid SDD: automatic creation of a success SDD Money-Out transaction in the same payment account as the one from which the original transaction has been issued
|Type of mandate||SDD Core mandate (example available here)||SDD B2B mandate (example available here)|
|Signed mandate to be provided by the debtor to his/her bank||Not necessary||Mandatory|
|Notification by the creditor to the debtor before each direct debit||Mandatory|
|Debtor time frame for contesting a direct debit (E = direct debit execution date = debit date)||
Between E and E + 8 weeks: transaction can be challenged by the debtor to his/her bank with no evidence required & immediate re-credit of the debtor/immediate debit of the creditor once the unpaid item is received by Lemon Way
Between E + 8 weeks and E + 13 months: transaction can be challenged by the debtor to his/here bank, but no automatic re-credit - dependent on submission by the creditor of the proof of mandate/product delivery, etc.
|Between E and E + 13 months: transaction can be challenged by the debtor to his/her bank, but no automatic re-credit - dependent on submission by the creditor of the proof of mandate/product delivery, etc|
For more info on the management of unpaid/returned SDD items, please take a look at the dedicated topic.
If SEPA Direct Debit is not yet included in your contract and if you want to activate it, don’t hesitate to contact us (Submit a New Request button located in the Header of the Lemon Way Support Center), and specify your projected volumes as well as estimated average transaction amounts, so that one of our Fantastic Business Developers can get back to you with a pricing proposal.